It's possible that some small merchants who have been accepting magnetic strip cards but don't have the ability to process chip cards will stop accepting cards and will insist on payment by cash or check. A number of companies, like Square, sell chip card readers for small businesses, and PayPal is expected to offer one this fall.
Come on, isn't this conversion to chip cards going to be a breeze?
The process of converting to chip cards would seem to be easy, but perhaps only to technically minded people. Americans have used magnetic swipe cards for decades and the practice is entrenched. And store clerks might, or might not, be trained to help customers use the new chip card payment terminals.
"Never underestimate how difficult it is to change entrenched behaviors," said McKee of 451 Research. "Card issuers are already uneasy about the change in the process from swiping a card [with a magnetic stripe] to dipping [inserting]" a card with a chip.
To show how the transaction process could work with chip cards, Computerworld recently attempted to make a large purchase using a Bank of America MasterCard debit card with a chip at a new chip-enabled terminal in a Wal-Mart in Harrisonburg, Va. After three failed attempts to pay by inserting the card into the chip reader, the transaction was successfully completed with a swipe of the card's magnetic stripe. The clerk said it should have worked as a chip card.
Wal-Mart and Bank of America didn't respond when asked to comment about the incident in the Virginia store, but there are still about seven weeks until October 1, when theoretically Wal-Mart expects to be ready for chip transactions and meet the liability deadline. Or, perhaps, that simple test is a foreshadowing of problems to come.
"The U.S. is transitioning to chip cards during the onset of the holiday shopping season," McKee noted. "The combination of long queues, impatient shoppers and a new process for card transactions will not be pretty. Chaos will ensue ... It will be messy."
In interviews, officials at both Visa and MasterCard have indicated that they hope their public information campaigns through GoChipCard.com and other venues will enhance public understanding of the conversion.
Carolyn Belfany, senior vice president of U.S. product delivery at MasterCard, said in an interview in late June, "We certainly don't think that the consumer should fumble through" using a new chip card.
The GoChipCard.com site was designed to provide clear, simple instructions -- such as the caveat to resist the impulse to remove the card quickly, she said. Variations in the way chip card terminals work should be apparent. "Hopefully that stuff will be minimized, but we'll still have variation," she said.
It's safe to say that merchants, banks, card companies and consumers will all have their collective fingers crossed in coming weeks as the advent of chip cards approaches.